A Primer on University Presses
MIKE LEONARD, MIT PRESS
A university press is simultaneously a cultural and a business enterprise. It contributes to the advancement of knowledge by disseminating scholarly information, chiefly in the traditional forms of books and journals, to specialized audiences extending beyond the physical limits of the university campus. A press is usually most successful when its publishing program reflects the strengths of the university’s teaching and research programs and when it responds to changing and emerging markets affecting the editorial areas of interest.
A university press operates on a nonprofit basis, but it is not "for loss." Although the goals of a university press differ from those of a profit-oriented publisher, the university press nonetheless requires management skills and financial and operational controls to increase the probability of successful performance year after year. This need is particularly important in times of economic uncertainty and turbulence, when many factors influencing a press’s operations, such as price inflation and diminishing library budgets, are outside its control.
Approximately 90 institutions in the U.S. have university presses. The presses range from small ones with a few employees, publishing 10 to 20 books per year, to relatively large ones that release over 150 titles annually. Some maintain significant scholarly journal publishing programs. The majority of presses are organized as departments of the university, with directors who report to a dean, provost, or vice president.
Regardless of size, all university presses share common needs. The press must develop and maintain an editorial acquisitions program plan; it must implement operational systems and procedures to produce and distribute its publications effectively; and it must have a sufficient financial base to support its publishing operations.
Depth (concentration) versus breadth (diversity) is always an important issue for the university press and its parent institution because of the impact that it has on resources. As a group, university presses publish in a wide range of subject areas. Because the press cannot be all things to all people, it must develop a distinctive niche for itself. It should strive to be unique. The key to its success lies in focusing its efforts and resources within a group of well-defined disciplines and in developing continuity in its programs.
The director of a university press is responsible for defining and updating editorial program plans. This "design" of the publishing program is an important strategic planning issue for every university press because the publications it chooses to produce its "list"—effectively define the press. The mix of subject areas will likely change over the long term as interest wanes in particular fields of knowledge and the volume of information continues to expand. Declining sales of monographs, for instance, have spurred many university presses to expand their offerings of supplementary textbooks, reference works, fiction, and books for an educated lay public. Many state-affiliated presses have successfully created lists of books of regional interest.
Manuscripts published by a university press should have the approval of the press’s editorial board or publications committee. A book-publishing proposal should be presented in a standard format that includes sufficient information to enable the board or committee to evaluate the merits of each project, including an agreed-upon number of expert reviews obtained by the sponsoring editor. Once a work is accepted for publication, the editor is free to offer a contract to the author.
Organization and Operation
Publishing is a process that requires the coordination of many individuals with specialized skills. It encompasses acquiring works to publish; editing authors’ manuscripts; designing books; contracting with suppliers for typesetting and manufacturing; planning and carrying out promotion and selling activities; processing orders through a computerized inventory control system; managing credit and collections; and maintaining proper accounting and financial reporting systems. The systems and procedures adopted by the press should be simple, practical, and cost-effective. A full-service press may perform all the above activities itself; many of these also can be contracted to outside freelancers and vendors.
Competitive bidding procedures should be established for placing manufacturing orders. The selection of vendors should be based on price, quality, and delivery. A state university press should not be arbitrarily forced to place purchase orders with in-state vendors if more favorable pricing is available from suppliers in other areas of the country.
A formal internal procedure for the approval of print-run quantities should exist. The press should periodically compare its actual sales of individual titles to the quantities printed to identify any pattern of overprinting.
The press must have a marketing staff capable of creating seasonal and subject catalogs and brochures, conducting direct mail campaigns, generating publicity, preparing advertising copy, and representing the press at the book exhibits of academic and professional meetings. It will also need to employ, or hire on a commission basis, sales representatives. If the press’s list has potential for significant sales in international markets, the press must explore arrangements for distribution in foreign countries, perhaps through the auspices of other publishers and distributors.
Pricing products is often more of an art than a science. When determining prices for its books and journals, the press must take into account both the need to recover its direct and indirect costs and the need to set prices within ranges that different markets are able to bear. Certain areas in the humanities and social sciences tend to be more price sensitive than others, and books intended primarily for text use need to be priced competitively. When a book is reprinted, its price should be reviewed for possible adjustment. The entire backlist of titles should be reviewed on an annual basis for price increases and possible discount category changes. This procedure is particularly critical during prolonged periods of inflation.
The sales department of the press, in consultation with the director and the business manager, should prepare the fiscal year sales forecast using title-by-title estimates of new book sales and adding separate estimates for the backlist. At least one interim reprojection of sales should be made, usually at midyear, taking into account actual results and sales expectations of the next season’s list.
The type of order processing and inventory control system the press requires depends upon its volume of sales transactions and whether it elects to perform this function itself or contract it out to another publisher or service organization. There are several cost-effective computer systems available that meet most, if not all, the needs of any press. As computer technology continues to evolve, more powerful systems will become available, offering larger data storage capacities and more powerful software. In addition, increasing numbers of publishers will integrate electronic ordering from booksellers as a cost and time-saving alternative to conventional paper-based ordering systems.
Credit and Collections
The press must take steps to protect and enhance its cash flow on a continuous basis. Someone should be delegated responsibility to serve as the credit and collections manager, either part-time or full-time, depending on the volume to be managed. An effective credit policy must be established to allow bookstores and other resellers to make purchases. Account statements and late notices must be sent to customers, and a routine must be established to place uncollectible accounts into the hands of outside collection services.
The press should employ an accounting system based on accrual accounting principles and procedures. Its chart of accounts should be designed with publishers’ special classifications in mind. A simple cost accounting subsystem should be employed to track the work-in-process cost of individual titles, new and reprint. Routine journal entries should be made during the year to record sales, cost of sales, and royalty expenses; and interim financial reports should be prepared by the press business office.
The press must have a policy on inventory costing and write-down. The "plant cost" of books—the fixed, nonrecurring manufacturing costs (typesetting, artwork, reproduction proofs, negatives, plates, dies, and offset fees)—may be included in inventory cost along with the "running" cost of paper, printing, and binding; or it may be separately capitalized and written off on a faster schedule. Editing, design, and production supervision, however, are most often treated as current operating expenses and not charged to inventory.
The press should make an annual physical inventory as close to the end of its fiscal year as reasonably possible. As part of its fiscal closing, the press also should make title-by-title inventory "write-down" calculations by using a formula that it applies on a consistent basis from year to year. To avoid falling into a pattern of overprinting in relation to sales, the press should routinely compare its print-run decisions against subsequent actual unit sales for titles within individual subject areas or annual lists, using a sample large enough to draw reasonable conclusions.
The Annual Operating Budget
The overall financial control tool for the press is its annual operating budget, which sets forth projected income from book and journal sales and subsidiary rights; plant and manufacturing costs; royalty expenses; and editorial, design and production, marketing, order fulfillment, and general and administrative operating expenses. The funding source for any projected operating deficit must be identified, unless the press absorbs such operating losses against a reserve fund. A cash-flow projection of expected receipts and disbursements should also be prepared to include items that affect the press’s balance sheet accounts, such as additions to inventory and collections of accounts receivable.
Like any other business enterprise, the press must be sufficiently capitalized at all times or it may get into financial trouble. Its working capital needs are driven chiefly by its size and the scale of its operations. In consultation with its parent institution, the press should seek to stabilize itself within a reasonably flexible annual range of title output. If the press is advanced a fairly large amount of seed money, the college or university administration may need to "forgive" this amount as the cost to establish its press. If the press has no endowment or substantial funds in reserve, a significant portion of its working capital advances must be considered an equity investment, supported by the assets of the press.
University press publishing, by definition, is subsidized publishing. Most university presses obtain some form of direct or indirect subsidy from their parent institutions. This may take the form of salary support, free or inexpensive use of space, services provided by the university, low- or no-interest working capital advances, income credits on invested funds, or a waiver of various overheads that may or may not be assessed to other income-producing activities. How much subsidy the university provides its press depends upon a number of factors, including the makeup of the particular publishing program and the potential sales revenue it can generate, the costs to produce different kinds of books, the operating expense structure and particular overheads that may need to be covered by the press, and the resources and priorities of the parent institution. The university administration must also accept the fact that, because the press operates in the marketplace, it will have both good years and bad years. The parent institution must view its commitment to the press as long term, and it must create a mechanism to see that its "investment" is protected. At the same time, press managers must work diligently to achieve the press’s editorial, operational, and financial objectives as set forth in its short- and long-range plans.
The university should consider how its press is governed. A press that is organized as a separate corporation or trust has its own set of bylaws and governing board. A press that functions as an operating department of the university, with the director reporting to a senior academic or administrative officer, should consider the possibility of establishing a permanent advisory board to the press. The board would meet periodically to review operating and financial performance and plans for the future, including plans relating to the direction of the editorial program. The board should avoid any attempts at micromanagement and should be balanced with members from the faculty, administration, and outside publishing companies.
If a small press believes that it does not need a permanent board, it should consider the alternative of a visiting committee of two or three individuals who perform a review of press operations on a periodic basis. The purpose of any press board or committee is to create a mechanism for the press to gain the benefits of different perspectives concerning its operation. In addition, the university administration can better understand the needs and limitations of its press and its role in the scholarly publishing community.